Health Programs and Education Get Help in Whitman's Budget

By JENNIFER PRESTON

Published: January 24, 1999

TRENTON, Jan. 23—
With an extra $1.1 billion to spend in the coming fiscal year, Gov. Christine Todd Whitman will recommend giving a quarter of it back to taxpayers and using most of the rest to cover increased spending for public schools, state colleges, open space preservation and expanded health care programs for children and the elderly, New Jersey officials said today.

The Governor's $19.1 billion spending plan, outlined today by senior administration officials, includes $200 million to cover the first installment of the property tax rebate plan that she announced this month. Mrs. Whitman will formally present her budget to the Legislature on Monday.

The strong economy and proceeds from the nationwide tobacco settlement have helped swell the state's coffers and push up revenue forecasts for the next 18 months, said State Treasurer James A. DiEleuterio Jr.

Of the $92 million that New Jersey expects to receive next year from the tobacco settlement, Governor Whitman will recommend spending $18.6 million for new programs aimed at reducing smoking among teen-agers, Mr. DiEleuterio said. The state is to collect $7.6 billion over the next 25 years as part of the settlement of a class-action suit against the major tobacco companies.

Also, Mr. DiEleuterio said the Governor would propose using $36.4 million to cover increases in the cost of health benefits for state employees. The remaining money would be used for new mental health programs for state prisoners, early cancer screening, expanded health care for elderly residents, and other programs.

Spending would rise about 4.5 percent, including money that Mrs. Whitman and state lawmakers have said they intend to return to taxpayers this year. Mrs. Whitman has also recommended that $750 million be placed in the state's so-called ''rainy day'' reserve fund.

In addition to the $200 million for the property tax rebate program, Mrs. Whitman's budget includes $23 million for a program that freezes property taxes for low-income elderly and disabled homeowners. The budget also accommodates a $22 million tax cut, proposed by Assembly Speaker Jack Collins, a Republican, which would excuse about 200,000 low-income residents from paying state income taxes.

In terms of new spending, Mrs. Whitman is proposing a $317.7 million increase for public schools, $70.7 million for state colleges and universities, $100 million for open space preservation, $10 million for new initiatives to help spur residential development in cities, and $30 million for expanded health care programs for low-income children and the elderly. ''With this, her sixth budget, it is fair to say that Governor Whitman's vision of a government that balances fiscal prudence with social compassion has succeeded,'' said John Farmer, the Governor's chief counsel.

Under the proposed budget, there would be no layoffs of state workers. State aid to municipalities would also rise by $23 million, the first significant increase since Mrs. Whitman took office. The increase includes money, requested by Senate President Donald T. DiFrancesco, a Republican, to cover routine inflationary increases for municipal services. The budget also sets aside up to $35 million in incentives for the state's 566 municipalities to reduce costs by sharing more services, like police and fire departments.

William Dressel, executive director of the New Jersey League of Municipalities, said the budget ''appears to be pretty good news, but we have to fully evaluate the details.''

When Governor Whitman unveiled her five-year property tax rebate plan in her State of the State address, she undercut one of the Democrats' most effective campaign weapons: the state's high property tax rates. After her bruising re-election campaign in 1997, Mrs. Whitman promised voters that she would help reduce the property tax burden.

Under the plan, Mrs. Whitman would begin sending rebate checks to homeowners this year. The checks, which would average about $120 this year, would eventually rise to $600 in the fifth year of the program at a cost of $1 billion for that year.

Some critics say that Mrs. Whitman, whose second and final term ends in 2002, should not have proposed a program whose costs will rise steeply after she leaves office. They say it is the latest in a series of moves that she has made over the last six years that push costs, like debt service payments, into future years.

Some Democratic lawmakers said Mrs. Whitman should consider speeding up the property tax rebate schedule, considering the state's rosy revenue picture. ''We have enough money to do more right now,'' said Assemblyman Joseph Charles Jr. of Jersey City.

Mr. Charles also said that Democrats are encouraged by what he called the ''Governor's professed conversion'' on property taxes. ''But we remain skeptical about the way she is proposing to spend the revenue windfalls arising from these heady economic times and her fiscal policy of increased borrowing,'' he said.

Mr. Charles said he expected debate over how the proceeds from the tobacco settlement should be spent. Under the agreement, states can largely spend the money however they want.

When asked why Mrs. Whitman had proposed using some of the tobacco settlement money to pay for health benefits for state employees, Mr. Farmer said it was part of the Governor's plan to put all of the proceeds into health programs.

Mr. Collins, the Assembly Speaker, described the proposal as a ''very good budget.''

''It has a lot of aid to help citizens in various communities,'' he said. ''I am particularly pleased with the increase in the higher education budget. I am also pleased that there are no layoffs.''

Mr. DiEleuterio said that the strong economy has pushed up revenue estimates by $275 million for this fiscal year, which ends on June 30. He said the state, anticipating strong growth but at a more moderate pace during the next 18 months, is expecting that revenues will be $897 million more in the new fiscal year. ''This has been the best two-year period, 1997 and 1998, in the last 10 years,'' he said.

He said most of the money is coming from growing sales, income and corporate tax collections. He said half of the increase in state income tax collections can be attributed to the Wall Street economic boom.

State Senator Bernard F. Kenny, a Democrat from Hoboken who is a member of the Budget and Appropriations Committee, said Democrats would ''monitor the plan closely,'' considering that the budget is heavily dependent on the economy. ''It would be a tragedy for the taxpayers of New Jersey if the benefits of a thriving national economy were squandered on election-year gimmicks,'' he said.